Designing a blockchain network to coexist with existing systems of record in an organization is important as a cost consideration. Integration should be through both business and technology issues, since downstream transaction systems impact essential business systems. By working with many enterprises, I've found that integrating blockchain with the adjacent systems has a significant cost impact on their blockchain projects. It really needs to be addressed early in the planning stages, so not to adversely affect enterprise adoption.
It's also important to think about operational issues. By safeguarding the elements of trade, trust, and ownership—and the inherent properties of blockchain such as immutability, provenance, and consensus—a trust system promises to help eliminate redundant and duplicate systems and processes. These duplications cost an organization significant resources, leading to slower transaction processing and associated opportunity costs. One goal with blockchain adoption should be to address the central pain point of the existing process. The aspiration is for a transparent ledger that increases trust, saves time and significant costs, and provides better customer service.
As for network extensibility, designing for extensibility means taking future growth into consideration as you plan the implementation. Extensibility measures a system's ability to extend and the level of effort that will be required to implement extensions. Extensibility is important with blockchain business network design, not only to accommodate for the dynamic nature of business (with all its regulations, competitive pressures, and market dynamics), but also to accommodate for network growth (the addition of regulators, market makers, disruptions, service providers, and so on).
The following are some design considerations to help ensure network extensibility:
- Flexibility with membership:A blockchain network may start with a finite group of participants and roles, but new participants could later want to join the network, and others may want to leave. Therefore, you have to consider the mechanics of membership changes, including access to (shared) data. The member type is also an important thought when designing for extensibility, as the roles and type of members may change over time.
- Compute equity: There's a split between trust systems based on cryptocurrency and trust systems based on compute equity, so this is a fairly new concept. The types of participants and their business interests in the network are determinants of long-term sustainable infrastructure costs and maintenance. For instance, cost models of regulators may differ greatly from cost models of the primary beneficiary of a blockchain-powered business network.
- Shared business interests: Blockchain networks promise specific advantages for businesses, such as reduced risk, a reliable and predictable transaction network, lower compliance costs, and so on. But these shared interests can lead to other operational issues, such as data sharing and ownership as entities join and leave the network. Since regulations around data ownership evolve, as well as industry requirements for the durability of data, these should be evaluated carefully when you design a blockchain system.
- Governance: Governance includes managing technical artifacts such as technology infrastructure and governing data and smart contracts in a blockchain network. Layering governance in the following categories is recommended:
- Blockchain network/technology governance
- Blockchain data governance
- Blockchain smart contract governance
- Blockchain transaction management governance
When designing for extensibility, the goal should be to ensure that the blockchain network has sustainable operational elements and business growth elements. For example, in a sustainable model, every participant could deploy the chaincode that governs its own business process as it accepts and deals with digital assets, while also putting business participants in control of changing business processes, policies, and regulatory requirements.